Drug Money: Michigan Therapeutics Companies & Financing 2009-2019
It’s time to learn more about Michigan therapeutics companies. Having written about grant funding for therapeutics companies in Michigan and my experiences working in one, I wanted to continue my exploration of the ecosystem in Michigan and ask some broad questions: What kinds of therapeutics companies are in Michigan? What kind of technology do these companies work on? What’s their history? Are they still alive and thriving…or are they dead and buried?
To help me in this endeavor, I recruited Joey Panella, a financial analyst working in the University of Michigan’s Tech Transfer office. Joey provided expansive Excel sheets from Pitchbook, a massive database of private capital markets and a valuable tool for gathering information on startups.
Based on the Pitchbook data, there were approximately 39 companies that had a financing event during our selected timeframe (2009-2019). I say “approximately” because the definition of a “therapeutics company” was based on my interpretation of the company’s information in Pitchbook, which can sometimes be outdated or incomplete. In other cases, the descriptions in Pitchbook were a little ambiguous as to how a company should be categorized. It’s possible that another person could have categorized a couple of these companies differently than I have. So, it’s possible that these graphs and numbers may look slightly different depending on who analyzed the data.
As we saw previously with grant funding, a significant portion of NIH funding went to therapeutics companies in Ann Arbor, indicating a cluster of startup activity around the University of Michigan. Perhaps unsurprisingly, this is mirrored by the Pitchbook data. In the graph below, Ann Arbor had the most therapeutics companies that received financing between 2009-2019. Kalamazoo served as the headquarters for the second highest number of therapeutics companies, again reflecting the rankings seen with the small business grant funding.
While the time period for the analysis was 2009-2019, many of the companies were founded much earlier than this with approximately half of the companies founded before 2009, possibly reflecting the long timeline for drug development. The graph below provides an idea of when the companies were created.
Having an idea of when these companies were born, I next wanted to look at their current status. As shown in the graph below, a few of the companies were acquired or merged, a couple are now publicly traded, and a few went out of business. The vast majority of them remain alive and are still privately held. Notably, companies founded in the mid- to late-2000s represented the companies that went public or experienced an M&A, as well as the companies that have gone out of business.
Of the privately held companies, the majority are currently funded by either angel investor or venture investors, having raised a total of approximately $350 million, as reported in Pitchbook.
Having explored the history of these Michigan therapeutics companies, I next wanted to dig deeper into what they do, starting with their therapeutic areas. Interestingly, the focus of these companies was diverse, with no medical field dominating the list. Some companies have developed their drugs for multiple medical needs. A quick run through the gamut showed that there were numerous cardiovascular companies, multiple groups focusing on diabetes, several that were working on cancer, and a number of companies working on infectious diseases and immunology. There were also a few ophthalmology companies, a couple of neurology companies, and at least three companies working on the gastrointestinal tract. Kidney and liver disease were covered, and fibrotic and endocrine disorders had their representation, too.
A level of diversity was also observed in the types of technology these companies were developing. The word “therapeutics” can mean different things to different people and can encompass a variety of approaches to treating diseases. To learn more about what types of technology our Michigan companies were focusing on, I used their descriptions in Pitchbook, along with their websites, to broadly categorize their technology, leading to the figure below.
As the graph shows, there are multiple ways to treat disease. While some of the companies’ technology was not obvious or was hard to categorize, many of the companies are focusing on small molecules, which – as their name suggests – are small chemical compounds that act on specific, disease-related biological processes within the cells. In contrast to the small molecules, a number of companies are working on large, protein-based therapeutics. In this case, these companies are producing proteins to be used to modulate processes within the cells. The peptide companies land somewhere on the spectrum between the small molecule companies and the protein companies. Peptide-focused companies, including ONL Therapeutics, develop fragments of proteins – called peptides – to treat diseases. In contrast to proteins that are made and isolated from cells, these peptides can occasionally be synthetically made in a lab, similar to a small molecule. However, since peptides are fragments of naturally occurring proteins, they can behave similarly to proteins and bind cellular targets in a manner that resembles the full-sized protein’s activity. Michigan companies have also delved into a more recent technology known as gene therapy, which introduces specific nucleic acid sequences – DNA or RNA – into cells in order to treat diseases. These therapeutic nucleic acid sequences, for example, could be used to supplant mutated or nonfunctional genes within the cells, providing a correct gene sequence to help the cell to function normally and avert disease progression.
While many of the companies have focused on treating disease, there were several companies working on the prevention of disease through the development of vaccines. The vaccines were being developed to prevent various infectious diseases or, in at least one case, were being developed to help the body fight cancer. As briefly discussed in the coronavirus post, vaccines are designed to help prepare the body to quickly identify and react to disease-associated features, like proteins and structures on bacteria, viruses, and cancer cells.
This quick look at Michigan therapeutics companies has shown that therapeutic technology is continuing to be developed in the state across a number of fields and that there is a recognized drug development knowledge base within the state. These companies, as well as the earlier stage startup companies not included in this analysis, demonstrate the benefit of looking at the work being produced by researchers and companies in Michigan as we collectively continue on the quest for tomorrow’s therapeutics.
Special thanks to:
Joey Panella, Financial Analyst, University of Michigan (jpanella@med.umich.edu)
Qiagen and Todd Festerling for sponsoring the blog.